It is important to continue to put the same amount towards retirement each month, as you were before you had the baby. In fact you should be striving to be putting 15% of your income into a retirement account before you even think about saving for your child’s college… After you have done that you should start saving for your child’s education. You should look at a 529 savings account as an option. You can also begin to invest the money in mutual funds or other high yield savings accounts. The earlier you begin to save, the less money you will need to put aside each month.

Asking a college student to work and/or take out loans may not seem attractive now (especially for the student). Ultimately, however, you aren’t doing your children any favors if you put them through school only to become financially dependent on them down the road.

The tongue-in-cheek response we usually give is that the government, historically, has been willing to loan your children money to get an education. But up to this point, the government has not been willing to loan you money to retire.

Retirement Before College

So, in other words, you must focus on your retirement savings before you focus on college costs for this reason: while you can borrow money for college, you cannot borrow money for retirement.

This doesn’t mean that you cannot put away money for college, it just means that you should not do it if you cannot also save for retirement.

Kiplinger suggests that you split your savings into retirement and college funds:

Look at your savings as a whole and divvy it up in a way that makes sense to you. The best case would be to fund your retirement account to capture the entire employer match, and then put as much as you can into college savings. If that’s not possible, you might contribute, say, 80% to retirement and 20% to college. Gary Carpenter, a CPA and executive director of the National College Advocacy Group, suggests that a 529 account could make up 10% to 15% of your savings.

If you don’t have a lot to save, such an arrangement may be futile. For someone living beyond their means, nothing will get saved, and then parents will try to put out the immediate fire that is college funding first.

How To Save For Retirement And College

In order to save for retirement and for college, you need to first be able to put aside a 15% chunk of your income.

If you can find another 10% above that then you should also start a college savings plan.

I have been a certified tightwad since I became pregnant with my first child and decided to find a way to stay home with him. I enjoy sharing my experiences in my journey back to financial health and planning for a future -- which will include sending 2 kids to college and early retirement.